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Treasury’s new bid to boost 95% LTV mortgages

The Treasury is holding talks with lenders and mortgage trade bodies to explore how mortgage indemnity guarantees can be used to improve access to 95 per cent loan-to-value mortgages, including offering MIGs on older properties.

Treasury 480

Mortgage Strategy understands talks are at an early stage but the Treasury has discussed a mortgage indemnity scheme that would be open to borrowers who do not want to buy a new-build home, unlike with its NewBuy scheme.

Sources say no firm details have yet been drawn up and the Treasury is considering all options.

A source close to the talks says: “Essentially, the Treasury’s agenda is how do we improve lending at 95 per cent mortgages as there is unmet demand there and something needs to be done about it.

“What it is considering is how mortgage insurance can be more widely used to solve the problem. Whether the Treasury makes taking out a MIG at high LTV lending compulsory is not off the table but it is not their first port of call.”

In March, the Government launched NewBuy, a MIG scheme where lenders offer 95 per cent LTV mortgages for borrowers looking for a new-build property that is jointly underwritten by housebuilders and the Government.

The scheme has come under criticism because it restricts borrowers to purchasing a new-build property and because all participating lenders except Barclays have not been given more favourable capital requirements for participation in the scheme.

London & Country associate director of communications David Hollingworth says: “It all depends on the details but if the Treasury plans to launch a MIG-type scheme, then to get some uptake lenders will have to be given relief on capital requirements. This type of scheme will coax lenders back into this part of the market.”

A Treasury spokeswoman says: “We have said that we will do more to help families who can afford a mortgage, but are unable to raise a large deposit, to buy their own homes. We are continuing to look at what can be done and will provide further details in due course.”


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  • GHU 21st February 2013 at 10:52 am

    @ Chris Gardner – perhaps you stop using lenders that credit score? YOu are asking for a computer to be flexiable and that doesn’t work. Ask the udnerwriter below it and they are probvably scared of contradicting their ‘master’ and come up with any feasible excuse they can.

    I’ve worked in that sort of place and the culture is always that the machine is right

  • Chris Gardner 18th February 2013 at 2:47 pm

    all well and good but there are plenty of decent 95ltv deals out there already – except that virtually nobody can pass the score to get the deal.

    Widening criteria is what the market needs, for god sake even using a price comparison website for insurance premiums paid monthly leaves a footprint on your file thes days – ergo, credit score gets lower.

    the problem is that lenders are way too scared of being accused of reckless lending so knee-jerk right back the other way.

    I have a customer who has a business turning over 66mill – needs 50% ltv on 2mill – been tiold by his bank of 30 years its a no-go as he is exposed to the greek market. Nuts.

  • Tom Cleary 18th February 2013 at 12:59 pm

    Well said GHU – Mortgage affordability is at a twenty year low! The biggest issue for FTB’s is the deposit, not the monthly payments, which are often considerably cheaper than renting the equivalent property. This initiative will go some way to help solve the deposit problem. And as a Mortgage Broker based in London, I can assure you that there is not a property crash anywhere on the horizon. Quite the opposite is true…

  • Grey Haired Underwriter 18th February 2013 at 12:21 pm

    Anon 12.32. What a lot of claptrap. If prices were going to crash as you would like they would already have done so. The easy way to achieve your aim would be to put interest rates up, make the economy crash, make hundreds of people unemeployed and homeless and flood the market with some nice cheap BTL.

    Why is it that you think property prices are out of line with earnings – the factor is interest rates and the ratio of earnings to mortgage payments and interest rates are cheap

  • John Constable 15th February 2013 at 12:32 pm

    This proposal could be seen as a thinly veiled move to prop up house prices.

    An alternative is to allow the market to correct itself i.e. drop prices by around 20% to broadly bring them back into line with earnings.

    Then people might be able to afford to buy.

  • AJK 12th February 2013 at 6:15 am

    Long overdue! Get on with it rather than offer fat cats at FSA knighthoods!